EduTech $($Pty$)$ Ltd $($EduTech$),$ a South African incorporated entity, is a leading

provider of innovative educational technology solutions. EduTech develops e$-$learning

platforms, educational software and hardware solutions tailored to the needs of

schools, colleges and universities across South Africa.

EduTech has a June financial year$-$end. The company is not a small business

corporation as defined for normal tax purposes. EduTech will elect any option available that will defer its normal tax liability.

Below is an extract of the Statement of Profit or Loss and Other Comprehensive

Income of EduTech for its $2024$ financial year$-$end.

Notes Rand

Gross profit $1900500$

Other income:

Insurance payout $-$ printer A $140000$

Operating expenses:

Depreciation $$ printer B $1\mathrm{.}1(6667)$

Depreciation $$ administrative office $2(66667)$

Repairs $$ digital whiteboard $3(10000)$

Accumulated leave $4(50000)$

Prepaid lease $5(90000)$

Pension fund contributions $6(180000)$

Restraint of trade payment $7(120000)$

Salaries and wages $8(300000)$

Profit before tax $1117166$

Notes:

$1.$ EduTech replaced a key piece of manufacturing equipment, a $3$D printer, due to

deterioration over time. The original $3$D printer $($Printer A$),$ originally purchased

second$-$hand for R$80000$ on $10$ March $2019,$ had become increasingly unreliable

and costly to maintain. As a result, EduTech replaced it with a new, unused, more

advanced model $($Printer B$)$ on $1$ May $2024,$ at a cost of R$120000.$ Printer B was

put into use immediately on the same day. An insurance payment of R$40000$ was

received on $30$ April $2024$ from EduTech$$s insurance company for printer A$.$ For

accounting purposes, EduTech depreciates printers over a $3-$year period.

$1\mathrm{.}1$ The R$6667$ depreciation expense was recognised, in accordance with the

accounting policy of EduTech, for Printer B$.$

$2.$ On $1$ September $2023,$ EduTech purchased a new administrative office space for

a total cost of R$800000,$ providing the necessary infrastructure to accommodate

its growing team and support its continued expansion. For accounting purposes,

EduTech depreciates administrative buildings over a $10-$year period.

$3.$ On $15$ June $2024,$ one of EduTech's digital whiteboards required repairs due to

non$-$functional touchscreen functionality. The repair costs totalled R$10000,$

restoring the whiteboard to its original condition.

$4.$ Mr Smith, an employee of EduTech, retired on $31$ March $2024$ and became eligible for a cash payout of R$50000$ in respect of accumulated leave as per the

company$$s remuneration policy. EduTech paid Mr Smith R$35000$ of this cash

payout on $30$ April $2024,$ with the remaining R$15000$ paid to him on $2$ July $2024.$

$5.$ On $1$ December $2023,$ EduTech entered into a contract with EduBoard $($Pty$)$ Ltd

$($EduBoard$),$ whereby EduBoard will lease a digital whiteboard to EduTech. The

contract grants EduTech the right to use the digital whiteboard for a period of $12$

months. The contract stipulates a once$-$off lease payment of R$90000,$ which

becomes due and payable on the date of signature of the contract.

$6.$ EduTech contributed R$180000$ on behalf of its employees to an approved

pension fund during the $2024$ year of assessment.

$7.$ On $1$ January $2024,$ EduTech paid R$120000$ to Learningsphere Technologies

$($Pty$)$ Ltd $($LST$)$ after signing an agreement. This agreement includes a restraint

of trade clause, preventing LST from directly competing with EduTech in the

educational technology sector for a period of two years from the date of payment.

LST is classified as a personal service provider as defined in paragraph $1$ of the

Fourth Schedule.

$8.$ Salaries and wages comprise the following:

a$)$ The total amount paid to employees in net salaries and wages was R$300000.$

b$)$ Alex Greenway joined EduTech as a full$-$time learner on $1$ June $2024,$ receiving

a salary of R$15000$ per month $($which formed part of net salaries and wages

expense in $8.$a$).$ Alex entered into a registered learnership agreement with

EduTech for three years. Alex has an NQF level $6$ qualification and has no

disability. The agreement adheres to all the specifications of the Skills

Development Levies Act and is registered with the relevant SETA. No recording

was done in EduTech$$s books for this learnership agreement transaction.

EduTech suffered an assessed loss of R$1500000$ during its $2023$ year of assessment.

REQUIRED:

$1\mathrm{.}1$For the $2024$ year of assessment, calculate the taxable income of EduTech $($Pty$)$

Ltd$.$

$$ Start with the profit before tax of R$1117166.$

$$ Where applicable, support your answers with references to the relevant

sections of the Income Tax Act.

$$ Add back any accounting entries.

$$ Please ensure that your response includes clear documentation or indication

when no adjustments are required.

$$ Ignore any capital gains tax and VAT implications.

$$ Round to the nearest rand.